Nickolas Varvaris (Barton, Liberal Party) Share this | Hansard source

I would like to take this opportunity to follow on from the excellent contributions my colleagues have made to this bill. This important bill before us today is another component of the coalition's election commitment to the important reforms that our small business sector needs. The coalition has a strong commitment to small businesses, because—unlike those opposite—many of my colleagues come from a small business background. This side of the House understands the needs of small businesses, the challenges of running small businesses, the sacrifices individuals and families make to keep their businesses afloat and the enormous contribution the sector makes to our communities and economy.

The statistics around small businesses have been reiterated many times in this House and, for the purposes of this bill, I would like to take the opportunity to mention them again. Ninety-six per cent of all businesses in Australia are small businesses, and they employ the majority of our workers. This includes the 13,000-plus small businesses in my electorate of Barton. Under Australian regulations, you are classified as a small business when you employ less than 20 people and have an a annual revenue turnover, excluding GST, of less than $2 million. Unsurprisingly, these are the majority of businesses that are owned by our constituents, whom we are elected to represent. As a consumer, these are the majority of businesses that I would personally come into contact with in my electorate.

We all know that small businesses make a significant contribution to the Australian economy, in terms of employing Australians, and that their collective output totals one fifth of the nation's gross domestic product. As the Minister for Small Business has mentioned previously, we on this side of the House are committed to ensuring that small businesses have the access to the resources to help them invest in success and that they are provided with adequate incentives to continue working in their business without unnecessary hassles, like red tape and excessive bureaucracy, so that entrepreneurs are rewarded for their efforts rather than punished.

The Treasury Legislation Amendment (Small Business and Unfair Contract Terms) Bill 2015 will seek to address some of the issues that our small businesses continue to face on a day-to-day basis, particularly with their contractual needs. We on this side of the House have argued for many years that small businesses have relative or no market power when it comes to negotiating contracts and often this means that they have no real bargaining power when doing business with other businesses who are bigger and better resourced. This can mean a 'take it or leave it' approach when it comes to standard form contracts with minimal, if any, protection for the small business if they are left with unfair terms and conditions.

Prior to this bill, there has been no real assistance for small businesses, who are left disadvantaged or financially crippled when this occurs. Unlike consumer law, where consumers have an avenue for appeal or assistance in a contractual context, small businesses do not have this assistance. They are left with the ultimatum of either taking the risk or no business deal at all. The coalition believes this is unfair, given that most Australian businesses are small businesses; therefore, this leaves a majority of businesses vulnerable to those with greater market power. We believe that a fair playing field is just and enables a realistic fair go for small businesses by allowing the unfair contract terms protections available to consumers to be made available to small businesses as well.

I would like to acknowledge quickly that although consumers have been protected since 2010, businesses were never afforded this opportunity despite the Rudd-Gillard-Rudd Labor years. So whilst the opposition claims that it is the best friend of small businesses and that they truly understand their needs, this seems implausible given the many opportunities they have had for reform, to really listen to the sector and to heed their advice.

The Small Business and Unfair Contract Terms Bill is an Australian first, designed after the government has listened extensively to stakeholders. Many of the submissions and survey responses indicated that a standard form contract should provide a remedy for small businesses that will at least create a disincentive for unfair contract terms to be enforced upon the other party, thus lowering the risk of the small businesses that lack the resources to analyse and foresee issues arising out of an unfair contract.

In addition, the Australian Small Business Commissioner has observed instances of misuse of market power in the contracting of telephone and internet services, office or commercial leasing equipment and retail outlet leases. Other examples of unfair contract terms can include unfairly shifting risks to another party who may not be well placed to manage them, unilaterally varying terms, limiting one side's obligations, terminating or renewing the contract, levying excessive fees on outstanding moneys or affecting the availability of redress for the other party. This can also include terms that are seen to cause financial detriment or otherwise to a party if they were to be relied on or enforced. If any of these were imposed in a consumer setting, the consumer would be disadvantaged. The consumer would also have access to help, whereas prior to this bill, the small business would not.

All of the above are reasons why we need to make sure we have mechanisms in place to offer strong protection for small businesses. Therefore, the bill before us today is long sought after and very much welcomed new protection for small businesses, and one that the coalition has long supported. When we help small businesses, we provide small businesses with greater confidence to enter into contracts to invest and grow their businesses. This in turn is better for local communities and our broader economy. This is especially important to note when we consider some of the risks that businesses take in their operations, including refinancing personal assets and putting the family home on the line to ensure that their businesses can remain open and so forth.

Whilst the law still expects small businesses to undertake due diligence in the larger value contracts, we want to ensure that in all fairness they should not be forced to either take it or leave it when they are given unfair contractual terms in their day-to-day transactions. We simply cannot assume that what is considered fair by medium- or large-sized businesses is fair for the small-sized businesses. The challenges faced by one end of the spectrum do not relate to those at the other end, quite simply due to the economies of scale and resources.

Every successful large business started small, and often with livelihoods in the balance. That is why it is crucial to give the right support to these businesses so that they grow and prosper and continue to employ workers and drive the economy. The new protections outlined in today's bill will enable a court to strike out a term of a small business contract that is considered unfair. As I mentioned previously, this can reduce the incentive to include such a term in a contract and this is helpful for small businesses that do not have the time or resources for legal advice, lengthy negotiations and so forth.

I want to reiterate that, along with the coalition's election commitments of extending help and protection to the small businesses of Australia, this legislation will still be in line with our commitment of reducing red tape and bureaucracy. This legislation is not designed for the government to become 'contract nannies' and it is not designed to encourage bureaucrats to spend time examining the multitude of small business contracts made daily. The inclusions are there because it is important to offer small businesses a necessary level of protection—they are often small fish in a pond with larger, more resourced and well-equipped fish. This government is committed to being the positive partner that small business needs and to working as hard for the success of small business as those in the businesses do.

The small business and unfair contract terms legislation allows our small businesses to restore time and resources back to their enterprises, part of Australia's two million small businesses. We are simply delivering on our election commitment by putting into practice what we have always believed in. This is the government that has provided $1.4 million to the Australian Competition and Consumer Commission to ensure businesses comply with the new rules. The coalition wants to ensure that Australia is the best place to start and grow a small business. Today's bill is an important part of the 2015-16 budget that we developed to produce the largest jobs and small business package in Australia's history. There are more than two million actively trading small businesses. They are an important driver of our nation's employment and innovation. This coalition is the only party that can be relied upon to ensure the needs of small business are represented and that the men and women have our support to ensure they continue doing what they do—employing locally and contributing to Australia's ongoing prosperity.

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